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Tuesday, March 17, 2009

The bill that would repeal the state's general fund growth limit is on the way to the House of Representatives after gaining final approval in the Senate this morning.

SB 228, which would remove the 1991 Arveschoug-Bird law from the state's statute books, was approved 21-14 after senators rejected an effort by Republicans to send the measure to the chamber's Appropriations Committee.

Under current law the state's general fund can increase to the lower of six percent over the previous year or to five percent of the state's personal income. Any tax revenues the state generates in excess of that is dedicated to transportation and capital construction projects. The 1991 statute does not affect the amount of revenue reaching state coffers.

One of the impacts of the law has been a "ratchet-down" of the state's general fund, which pays for K-12 and higher education, human services, corrections, and state agencies, among other things, when economic conditions force state tax receipts down.

GOP critics of the legislation say it violates the 1992 Taxpayers Bill of Rights, which includes a provision specifying that spending limits can be changed only by a vote of the state's electorate.

But Democrats, along with Republican supporters Sen. Al White of Hayden and Rep. Don Marostica of Loveland, point to a legal opinion by former state supreme court justice Jean Dubofsky that says the Arveschoug-Bird law only allocates existing revenues and does not actually limit the total amount of money the state may spend in a given year.

SB 228 must clear the House before heading to the governor's office. Gov. Bill Ritter has not publicly said whether he would sign the measure.